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'Two-fifth of restaurants will shut down'

Last updated on: May 03, 2020 13:13 IST

'Business will be 20% of what it was before the lockdown.'

Kindly note that the image has been posted only for representational purposes. Photograph: Ajay Verma/Reuters

Among the industries devastated by the prolonged national lockdown are India's restaurants.

The business of eating out is all but dead, barely kept alive in the ICU through the odd takeaway service here and there.

Even resumption of 'normalcy', expected some time in end-May or June, doesn't hold much promise for the business since the era of social distancing will mean restaurants spacing out their tables, which means fewer patrons.

Naturally, restaurateurs are in a state of shock.

Riyaz Amlani, who operates a chain of restaurants like Social, Mocha, Salt Water Grill, is the past president of the National Restaurant Association of India.

"The ones who can find capital will survive. The others will collapse," Amlani, below, tells Rediff.coms A Ganesh Nadar about the crisis confront India's restaurants business.

How is your industry faring?

Not very good at all!

Nobody anticipated this in our wildest dreams.

We cannot survive without cash. We don't even have half a month's salary for the month of March.

And what is the outlook for the future like?

Don't know how long it will take for restaurants to come back.

I think we will be the last to be allowed to open and do business.

Is there any help you are expecting from the government?

We were expecting some relief measures from the government. Like soft loans from the banks to manage the current situation.

The three-months freeze on interest and EMIs is not enough.

If the situation continues, do you think restaurants will be forced to close down?

Two-fifth of restaurants will shut down. As it is, a lot of restaurants were not doing well even before the lockdown.

So are the days of eating out over?

No, never. It is a question of when a cure will be available for the public.

The more important question is, will we survive the duration? I mean the industry.

How will restaurants adapt to the new culture of social distancing?

We will have to increase the distance between tables.

We will make digital menus available on people's phones.

Flushes and taps will be automated.

We will take measures to reduce the contact between customers and staff.

Won't spacing out the tables lead to a fall in patron numbers?

Anyway, we are looking at only half the tables. Business will be 20% of what it was before the lockdown.

This situation will prevail till a cure is found.

How will you make up the shortfall?

We will have to raise capital through banks or through equity.

What is the finance model of the restaurant business? Are they self-sustaining or run on loans? Will they default?

When we were operating at full steam, we were operating with a 15% profit margin.

So with 20% business, we will bleed.

A lot of restaurants are running on bank loans. They have mortgaged their houses.

Most will default unless the government gives soft credit and more time to pay the loans.

And then there are the workers, most of whom are migrants.

Some 50 per cent of our workers are migrants.

As and when the lockdown is lifted and our business is allowed to start, then we will have to decide about our workers.

Many of them will not come back to big cities.

We will have to cut staff as the earlier business will not be there for a while.

Do you see the industry overcoming this crisis?

The ones who can find capital will survive. The others will collapse.

How will restaurants adapt? Are takeaways the new mantra?

Takeaways don't solve the problem. We will lose money on delivery.

Delivery takes away a lot of money. Even that business will suffer.

A restaurant's business has to be in the restaurant. When you have a 5,000 square feet area you cannot survive on takeaways.